Wage Growth Hits Slowest Pace Since 2021

American workers saw their smallest wage bump in years last quarter, according to new data from the Bureau of Labor Statistics.

The Employment Cost Index — which tracks how much employers spend on wages — rose just 0.7% in the first quarter, the weakest pace since 2021. On an annual basis, wages climbed 3.4%.

That sounds decent on paper, but factor in inflation and workers are left with a real raise of just 0.7% over the past year.

The cooling wage growth comes as the labor market has gradually softened from the hiring frenzy of the post-pandemic years. The Federal Reserve has been watching wage data closely as it weighs future interest rate decisions.